Time to pull the plug on EV subsidies

by Keith Crain is Editor-in-Chief of Automotive News.

Editor’s note: The original version of this column, which also appeared on Page 12 of the April 24 issue, should have said the tax credit for electric vehicles was added during the George W. Bush administration.

For the first 200,000 electric-drive vehicles sold by an automaker, the federal government gives consumers a $7,500 tax credit. California and several other states add a few thousand more in incentives to sweeten the pot.

But the federal government should not be picking winners and losers in the marketplace. If the federal corporate average fuel economy target stays at 54.5 mpg by the 2025 model year there is already enough incentive for car companies to develop and market electric vehicles. Any automaker selling vehicles with gasoline engines will need EVs in the mix to reach that target.

The George W. Bush administration wanted to encourage the purchase of EVs so it added the tax credit. But with the federal deficit looming high and just about everyone joining the EV marketing blitz, it is time to remove the monetary incentive for buying an electric car. We sure don’t need to add to the deficit with another unnecessary subsidy.

For those interested in buying an EV there are plenty of reasons to do so — without the tax credit. Tesla brags that it will sell hundreds of thousands of its newest model, the Model 3. Indeed, it has already taken hundreds of thousands of deposits.

It is time for EVs to enter the mainstream of the automobile industry and for carmakers to find out just how they will do in the marketplace without a life jacket.

Consumers have plenty of EVs to choose from — in a variety of sizes and body styles and at prices that range from inexpensive to very expensive. And hydrogen-powered EVs are also being added to the menu.

For many consumers, EVs make a lot of sense. But only time will tell if enough Americans want them.

We should find out if the marketplace will sustain EVs without artificial incentives.

It is time to pull the plug on EV subsidies.

See original article here…



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